The highly anticipated earnings from NVDA on Wednesday brought out the speculators surging the stock price that drove a Nasdaq rebound on Monday. However, the DIA and IWM struggled to find footing making for a choppy day even as the short-term oversold condition suggests a relief rally to at least test overhead resistance levels. With a bit more potential inspiration on the earnings and economic calendar perhaps the relief can continue to gain strength today but keep an eye on the rising bond yields that hint the Fed may not be done with rate increases.
Asian markets enjoyed a relief rally overnight shaking off the rising bond yields and worries over the Chinese economy. European markets look to extend the relief started yesterday with the tech sector leading the way. U.S. futures also point to a bullish open ahead of earnings and economic reports as bond yields push to levels not seen since 2007.
Economic Calendar
Earnings Calendar
Notable reports for Tuesday include BJ, SCIQ, COTY, DKS, LZB, LOW, M, MDT, TOL, and URBN.
News & Technicals’
The U.S. banking sector is facing increased pressure from the global rating agency S&P Global, which downgraded the credit ratings and outlooks of several major banks on Monday. The agency cited the challenges posed by the ongoing pandemic, low-interest rates, and heightened competition as the main factors that could erode the banks’ profitability and credit quality. S&P Global followed the footsteps of Moody’s, which also lowered its ratings and outlooks for some U.S. banks last week. Both agencies warned that the banks could face higher funding costs and lower earnings in the near future.
Lowe’s announced its second-quarter results, showing a solid performance amid the high demand for home improvement products and services. The company reported a net income of $3.02 billion, or $4.25 per share, up from $2.83 billion, or $3.74 per share, a year earlier. This beat the consensus estimate of $4.01 per share. However, the company’s revenue fell slightly short of expectations, as it recorded total sales of $27.57 billion, compared to the forecast of $27.75 billion. Lowe’s attributed the revenue miss to the supply chain disruptions and labor shortages that affected its ability to meet customer demand. Despite the challenges, the company reaffirmed its full-year guidance, expecting a sales growth of 4.5% and an operating margin of 12.2%.
Zoom continued to enjoy strong growth in the second quarter, as more people and businesses relied on its services for remote work and communication. The company reported a revenue of $1.02 billion, up 54% year-over-year, and surpassing the analysts’ estimate of $991 million. The company also posted a net income of $317 million, or $1.08 per share, compared to $186 million, or $0.63 per share, a year ago. This exceeded the consensus forecast of $0.99 per share. Zoom also raised its full-year guidance, expecting revenue of $4.01 billion to $4.02 billion, and earnings per share of $4.75 to $4.79. Zoom also introduced a new feature that allows customers to start free trials for automated meeting summaries without recording calls, enhancing its product offerings and customer experience.
The S&P 500 and the Nasdaq rebounded from a three-week slump, led by a surge in NVDA heading into its highly anticipated earnings report on Wednesday. European stocks also rose, while Asian markets were mixed amid ongoing worries about China. Government bond yields climbed to multiyear highs ahead of the Fed’s annual Jackson Hole meeting. The 10-year Treasury yield reached 4.33%, the highest since 2007, and the 30-year yield hit 4.45%, the highest since 2011 putting more pressure on the banking sector and consumers. Today we face reports on Existing Home Sales, Richmond Fed Mfg. along with a couple of Fed speakers. We also have several notable earnings reports for the bulls or bears to find inspiration with a retail theme. Plan for volatility to continue with higher rates worries about the Chinese economy and banking downgrades.
Monday gave us a morning roller-coaster. The SPY gapped 0.24% higher, DIA opened just 0.04% higher, and QQQ gapped up 0.40%. The SPY and QQQ then rallied until 10:10 am. Meanwhile, DIA only managed to grind sideways until 9:45 am. Then, all three major index ETFs sold off steadily until 12 pm. At that point, QQQ was back at the opening level, SPY had crossed back below Friday’s close, and DIA had fallen significantly below Friday’s close. However, at noon, the Bulls stepped in to drive a strong, steady rally that lasted until a modest pullback in the last 15 minutes. This action gave us a large, white-bodied candle in the QQQ which barely failed a retest of its T-line on the last-minute profit-taking. For its part, SPY gave us a white Spinning Top candle. Finally, the DIA printed a black Spinning Top candle.
On the day, six of the 10 sectors were in the red with Utilities (-0.66%) leading the way lower while Technology (+1.42%) was far out front, holding up better than the other sectors. At the same time, the SPY gained 0.65%, DIA lost 0.13%, and QQQ gained 1.61%. VXX fell 2.64% to close at 25.03 and T2122 climbed slightly but remains deep into the oversold area at 8.66. 10-year bond yields spiked higher to close at 4.342% while Oil (WTI) fell 0.43% to close at $80.90 per barrel. This happened in average volume in the QQQ and below-average volume in the SPY and DIA. So, volatility reigned in the morning, but the Bulls took over for the second half of the day.
There was no major economic news reported Monday. However, Reuters did report that a “feud” between centrist and hardline Republicans in the US House has raised the risk of a government shutdown. The “Freedom Caucus” are pushing for spending $120 billion less than the deal agreed in June between the President and House (taking another bite of the apple). That group also announced its opposition to any stopgap measures to keep the government open. Other Republicans are looking for spending on top of the June level for defense, veteran benefits, and border security. If those two ideas were taken together, it would result in a 25% budget cut in the rest of the budget (including the infrastructure spending the President and Congress have been actively taking credit for recently). The centrist group (who now call themselves the “Governing Republicans”) say the hardliners ignore the reality that Senate Democrats are not going to go along with their priorities. As a result of this schism, GS reported Monday they now feel a shutdown is more likely than not. Current funding ends on September 30 for all 12 appropriations bills and Congress does not return from recess until September 12. At the same time, the National Federation of Independent Business released the results of its quarterly small business owner survey. The survey found 52% believe the US is already in recession, which is actually down slightly from 55% in April. However, 80% said the economy was “okay” or better, and most said their own business financial situation was “strong.” More than half also said they were less concerned about the health of their own bank, which is a dramatic increase from 31% which had that opinion in April.
In stock news, NKLA announced it will be selling $325 million in notes that can be converted into stock. NKLA fell almost 23% on the news. Later, Investing.com reported that GS is looking into selling its investment advisory unit. GS acquired the unit almost 5 years ago for $750 million. (That unit’s profit fell 60% in Q2, but this was partly driven by write-downs related to GS Consumer businesses.) At the same time, MU pulled a quasi-extortion move by announcing its previously announced $100 billion (over two decades) investments into memory manufacturing plants in ID and NY won’t be possible without federal funding and tax credits for the two projects. (MU has asked for billions of dollars in support from the CHIPS Act funds.) By mid-morning, ESTE announced it has agreed to be acquired by PR for $4.5 billion, which comes to $18.64 per share. ESTE closed Friday at $16.23 and closed Monday at $18.94. Elsewhere, Reuters has reported that WMT is investigating its supply chain based on credible reports that part of its apparel products are being made by Cambodian prison labor, which is illegal in both countries. Other retailers, including UA and AHRO (Izod), may be using the same supplier according to the article. Elsewhere, DD announced it has agreed to sell an 80.1% stake in the chemical giant’s Delrin Resin business for $1.8 billion. (The buyer is a private company.) At midday, UNP announced that two rail lines into the Los Angeles region have been closed due to washouts caused by flooding. At the same time, Reuters reported C is now considering removing an entire level of management when the current leader of its largest division retires next year. Later, META said it will soon launch a web-based version of its Instagram Threads to better compete against X (Twitter). Meanwhile, negotiations between the UAW and “Big 3” automakers are again getting tense. The UAW reported Monday that STLA has threatened to move all Ram 1500 pickup production to Mexico unless they get an acceptable offer from the union. For their part, STLA did not deny the report, instead saying “Product allocation for our U.S. plants will depend on these negotiations as well as a plant’s ability to meet specific performance metrics including improving quality, reducing absenteeism and addressing overall cost.” After the close, SCHW said it plans to lower its headcount in order to cut costs. (SCHW did not disclose the number of employees or the exact timing, although it did say it expects to realize a $500 million charge for the move in the second half of 2023.)
In stock legal and regulatory news, the FDA placed clinical trials of GILD blood cancer drug on hold. (This comes a month after GILD had announced it was scrapping new late-stage trials of the drug on hold itself due to a lack of efficacy in earlier testing.) GILD had acquired the drug as part of its $4.9 billion buyout of “Forty Seven Inc.” back in 2020. Later, the NHTSA announced it opened an investigation into F over whether or not the company’s recall of 2022 Mach-E electric vehicles properly dealt with safety issues caused by high voltage contacts (which had been found to cause overheating that could lead to an abrupt loss of power while driving). The NHTSA has received a dozen reports of the same problem on cars that had already undergone the F recall repair. At the same time, the EU announced that it will require EU antitrust regulatory approval for the purchase of the German EEX exchange by NDAQ. (This is notable because the deal falls under the normal threshold for antitrust review.) In the UK, the British competition regulator finalized its approval of the AVGO $60 billion purchase of VMW. (It has provisionally approved in July.) Late in the afternoon, the US State Dept. approved the sale of $12 billion in military hardware to Poland. BA and LMT will be the primary beneficiaries of the sale of 96 Apache AH-64E helicopters, 1,844 Hellfire missiles, and 508 Stinger missiles. (No contract has been signed yet.) Then, near the end of the day, the US 10th District Court of Appeals upheld the dismissal of a shareholder lawsuit against SPR for misleading investors by withholding information about production cuts related to the two crashes of the BA 737 MAX. After the close, AAPL won the dismissal of a lawsuit that had claimed the Apple Watch blood oxygen sensor exhibits “racial bias” toward people with darker skin tones. Finally, also after the close, the US Dept. of Justice announced that TEVA will pay $225 million in fines and also divest a key generic cholesterol drug to settle price-fixing charges from the US Dept. of Justice.
After the close, FN and ZM reported beats on both the revenue and earnings lines. At the same time, LU and NDSN both missed on revenue while beating on earnings. On the other side, QFIN beat on revenue while missing on earnings. It is worth noting that ZM raised its forward guidance while NDSN lowered guidance.
Overnight, Asian markets were green across the board. Thailand (+1.29%), Hong Kong (+0.95%), and Japan (+0.92%) led the region higher with India (0.01%) and Australian (+0.09%) lagging well behind. In Europe, we see the same picture taking shape in the bourses at midday. The CAC (+1.19%) and DAX (+1.06%) are more typical, with the FTSE (+0.68%) lagging in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward a green start to the day. The DIA implies a +0.19% open, the SPY is implying a +0.39% open, and the QQQ implies a +0.48% open at this hour. At the same time, 10-year bond yields are down a bit to 4.318% and Oil (WTI) is off four-tenths of a percent to $80.40 per barrel in early trading.
The major economic news scheduled for Tuesday is limited to July Existing Home Sales (10 am) and API Weekly Crude Oil Stocks Report (4:30 pm). We also hear from Fed members (Barkin at 7:30 am, Goolsbee at 2:30 pm, and Bowman at 2:30 pm). The major earnings reports scheduled for before the opening bell include BIDU, BJ, CSIQ, CTRN, COTY, DKS, IQ, LOW, M, MDT, and SCSC. Then, after the close, LZB, TOL, and URBN report.
In economic news later this week, on Wednesday, Building Permits, Preliminary August S&P US Mfg. PMI, Preliminary August S&P Global Composite PMI, July New Home Sales, and EIA Crude Oil Inventories are reported. On Thursday, we get July Durable Goods Orders, Weekly Initial Jobless Claims, Fed Balance Sheet, and Bank Reserve Balance with the Fed. The Central Bankers Jackson Hole Conference also starts. Finally, on Friday, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer Inflation Expectation, and Michigan Consumer 5-year Inflation Expectations are reported. Fed Chair Powell also speaks at the Jackson Hole Conference which continues until Saturday.
In terms of earnings reports, on Wednesday, we hear from ANF, AAP, ADI, BBWI, DY, FL, GRAB, KSS, LANC, PTON, WSM, ADSK, GES, NTAP, NVDA, SNOW, and SPLK report. On Thursday, BURL, DLTR, NTES, WOOF, RY, TD, WB, GPS, INTU, MRVL, JWN, ULTA, and WDAY report. Finally, on Friday, there are no earnings reports scheduled.
In miscellaneous news, one of the largest IPOs ever was filed late Monday as Japan’s SFTBY (SoftBank) filed for the long-awaited stock offering of its Arm chip designer unit. (You may recall Arm as having been a $40 billion acquisition of NVDA before the deal was scuttled on antitrust grounds. Arm’s chip architecture is the main competitor of the x86 standard from INTC and AMD and is the basis for AAPL’s so-called “self-designed” chip used in Macs as well as by NVDA for its AI market cards. Elsewhere, in a hopeful possible read-through to China, overnight the CEO of Australian mining giant BHP said in his earnings call that BHP had seen solid growth in demand from some sectors in China. He mentioned steel demand from housing starts, infrastructure, automotive, and commercial property development as “pretty strong.” (They still expect China to produce a billion metric tons of steel this year, for the fifth straight year.) He went on to say, “In the near term, while the outlook for the developed world is uncertain, we expect China and India to remain relative sources of stability for commodity demand.” Finally, S&P followed Moody’s (two weeks ago) in downgrading 10 US Banks, including KEY and CMA.
So far this morning, BIDU, M, MDT, and IQ all reported beats on both the revenue and earnings lines. Meanwhile, LOW, CSIQ, and BJ missed on revenue while beating on earnings. On the opposite side, COTY beat on revenue while missing on earnings. However, DKS missed on both the top and bottom lines. It is worth noting that DKS, CSIQ, and COTY lowered their forward guidance. Meanwhile, MDT raised its forward guidance.
With that background, it looks like the Bulls are in control again so far in the premarket. All three major index ETFs show a premarket gap up and then are giving us white-bodied candles in the early session. The SPY and especially QQQ are retesting their T-lines (8ema) from below but the DIA Bulls still have more work to do before reaching that level. The short-term trend remains bearish. However, the QQQ and SPY are trying to break that three-week trend. Of course, the long-term trend is still clinging to a bullish inclination but it has been pushed hard by the Bears over the last three weeks. As far as extension goes, the premarket move gets rid of any concern about overextension below the T-line (8ema). Meanwhile, the T2122 indicator remains quite oversold, but it is not pegged to the bottom of its range. So, again we have room to move either direction, but the overdue pause or bounce may be here. Just remember the market can remain too extended a lot longer than we can remain solvent betting on a reversal that has not happened yet.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
Markets gapped down Friday, opening 0.62% lower in the SPY, down 0.60% in the DIA, and down 0.96% in the QQQ. However, that was the last we saw of the Bears on the day. The Bulls met the gap down with a slow, steady rally that recrossed the gap and hit the highs of the day at about 3:50 pm. The last 10 minutes saw modest profit-taking in all three major index ETFs. This action gave us white-bodied candles with essentially no lower wick and a small upped wick in the SPY, DIA, and QQQ. None of the index ETFs came close to challenging their T-line and only the DIA came near its 50sma. This all happened on above-average volume in the QQQ, and a bit below-average volume in the SPY and DIA.
On the day, seven of the 10 sectors were in the green with Energy (+0.84%) out front leading the way higher while Communications Services (-0.42%) lagging behind the other sectors. At the same time, the SPY gained 0.05%, DIA gained 0.02%, and QQQ lost 0.13%. VXX fell 2.54% to close at 25.71 and T2122 climbed but remains deep into the oversold area at 8.04. 10-year bond yields recovered during the day but still fell to 4.251% while Oil (WTI) climbed 1.26% to close at $81.40 per barrel. So, the Bears gapped us down only to be met by all-day buying. This might have been profit-taking after a strongly bearish week, which saw SPY down 2.05%, DIA down 2.23%, and QQQ down 2.21%. (The last 10 minutes might also be related to options expiration.)
There was no major economic news reported Friday. However, the Fed did publish data indicating that US banks did reduce lending in the week ending August 9. Overall bank credit fell from $17.25 trillion to $17.23 trillion. This was the second consecutive weekly drop. This included a decline in “loans and leases” falling from $12.15 trillion to $12.13 trillion and industrial loans also fell from $2.75 trillion to $2.74 trillion. At the same time, Reuters released a survey of economists (taken August 14-18) found that a strong majority feel the Fed is done raising rates. The same poll found a slim majority believing the FOMC will not start cutting rates until at least the end of March. 99 of 110 economists say the Fed will not hike rates in September, which is in line with current Fed Futures that show 89% of traders agree with the economists.
Related to foreign attempts to unseat the Dollar as the world’s default (and reserve) currency. The BRICS group will hold a meeting in South Africa this week. Ahead of this, the Fed released research showing that in the 20 years ending in 2019, 95% of all international trade in the Americas region was invoiced in Dollars. The same goes for 74% of Asian region trade and 79% of trade in the rest of the world (not including the EU, which uses the Euro). In addition, coming into this week’s BRICS meeting, there’s no obvious competitor to the Dollar yet. China’s Yuan is not a reliable candidate due to the fact the Chinese will not let their currency freely float with markets. Other BRICS countries don’t have the economic scale to make their currencies feasible as a Dollar alternative. In addition, trading US dominance of world markets for the dominance of China or India is something that would take a lot of thinking, convincing, and guts. The British would love to reclaim global reserve currency status for the pound, but they are too small economically and have massive historical baggage from their colonial past. This leaves the Euro, which is seen as too politically fragmented (especially related to their various economic and fiscal policies) and are unlikely to be supported by China and India. The last potential substitute is that there has been some talk of a gold-backed digital currency. However, that would take a massive effort and coordination to create a completely new currency, with the problem of managing the various country’s gold reserves (such that participants trust each other) on top of the creation and coordination of an agreed safe cryptocurrency (which many of the BRIC countries have opposed to date). The bottom line is just ahead of the BRICS meeting in Johannesburg, no public progress has been made on others finding a replacement for the US Dollar.
In stock news, Reuters reported Friday that some of the world’s largest consumer goods companies are already experimenting with using artificial intelligence to develop marketing and advertising content. UL, NSRGY (Nestle), and MDLZ were among the examples mentioned and the article also said they would be using data from WMT, AMZN, and KR to train their AI models. On Saturday, TSLA began notifying employees whose personal information had been disclosed in a data breach that happened back in May. (TSLA is only notifying employees because the AG of ME posted that it found two former TSLA employees had misappropriated that data in lawsuits filed Friday. The breach affected nearly 76,000 employees’ data.)
In stock legal and regulatory news, during the day Friday, US Senator Vance from OH (headquarters location of CLF which made a bid for X) again publicly urged X not to even entertain offers from foreign buyers. As you will remember, CLF was the first bidder to buy out X, followed by private company Esmark, and then MT (a Luxembourg-based company). Vance said he would pursue ways to ensure the company “stayed American.” Then, after the close Friday, the FDA approved a new dosage of REGN’s Eylea eye disease drug. On Saturday, GM announced it would cut its Cruise Robotaxi fleet in San Francisco by 50% temporarily. This comes hours after the CA Dept. of Motor Vehicles announced it has opened an investigation into several Cruise-involved crashes within the last week. After the investigation, GM will need to address the findings prior to resuming full-scale operations. (This reduced the number down to 50 Cruise robotaxis operating during the day and 150 in the evenings.)
In China market news, the country’s securities regulators announced a package of measures aimed at propping up their stock markets. These include cutting trading costs, changing rules to encourage share buybacks, extending trading hours, and increasing financial standards (which would, over time, increase the attractiveness and health of listed companies). The regulator spokesman answered a question by saying they did not know yet whether a reduction in stamp duties (fees for loans, leases, and securities trades) would take place as had been discussed recently. Most analysts applauded the moves but said it would not be anywhere near enough to overcome major concerns over the Chinese economy. Then to top this off, Monday the Chinese Central Bank cut its one-year loan rate by less than expected (down 10 basis points instead of the 15 basis-point cut that was expected (down to 3.45%). It also made no changes to the 5-year loan rate and the analyst consensus was that they would reduce that rate by 15 basis points. Most importantly, the PBOC did nothing at all to the long-term mortgage rates (which is what the property sector and public felt needed relief). As a result, the Chinese stock markets were not impressed with these actions and are still hoping for more and bigger government stimulus.
After the close Friday, PANW missed on revenue while beating on earnings. That beat was a surprise since the market had been very worried since the company said they would announce earnings after the market close on a Friday. (That was announced August 2 and the stock was down almost 16% since that timing was released.) PANW was up as much as 10% in after-hours trading following the report.
Overnight, Asian markets were mixed. Hong Kong (-1.82%), Shenzhen (-1.32%), and Shanghai (-1.24%) led the region lower. Meanwhile, Thailand (+0.44%), India (+0.43%), and Japan (+0.37%) paced the gainers. However, in Europe, we see green across the board at midday. The CAC (+1.18%), DAX (+0.74%), and FTSE (+0.53%) are leading the region higher in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward a gap higher to start the day. The DIA implies a +0.34% open, the SPY is implying a +0.49% open, and the QQQ implies a +0.63% open at this hour. At the same time, 10-year bond yields are spiking back up to 4.298% and Oil (WTI) is jumping up 1.32% to $82.32 in early trading.
There is no major economics news scheduled for Monday. There are also no major earnings reports scheduled for before the opening bell. However, after the close, FN, LU, NDSN, and ZM report.
In economic news later this week, on Tuesday we get July Existing Home Sales and API Weekly Crude Oil Stocks Report. We also hear from Fed members (Goolsbee twice and Bowman). Then Wednesday, Building Permits, Preliminary August S&P US Mfg. PMI, Preliminary August S&P Global Composite PMI, July New Home Sales, and EIA Crude Oil Inventories are reported. On Thursday, we get July Durable Goods Orders, Weekly Initial Jobless Claims, Fed Balance Sheet, and Bank Reserve Balance with the Fed. The Central Bankers Jackson Hole Conference also starts. Finally, on Friday, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer Inflation Expectation, and Michigan Consumer 5-year Inflation Expectations. Fed Chair Powell also speaks and the Jackson Hole Conference continues.
In terms of earnings reports, on Tuesday, BIDU, BJ, CSIQ, CTRN, COTY, DKS, IQ, LOW, M MDT, SCSC, LZB, TOL, and URBN report. Then Wednesday, we hear from ANF, AAP, ADI, BBWI, DY, FL, GRAB, KSS, LANC, PTON, WSM, ADSK, GES, NTAP, NVDA, SNOW, and SPLK report. On Thursday, BURL, DLTR, NTES, WOOF, RY, TD, WB, GPS, INTU, MRVL, JWN, ULTA, and WDAY report. Finally, on Friday, there are no earnings reports scheduled.
In miscellaneous news, US Treasury Bond yields were on a massive roller-coaster last week. Not only did the 10-year bond yield close at its highest level since 2007, but they also then crashed by the largest amount in history. Bloomberg quoted a bond market analyst as saying the reason is pretty simple. He said, “Given rising real yields and ambitious valuation levels in particular for US stocks, the risk-reward looks better for bonds.” Elsewhere, the US Dollar booked its fifth straight week of gains (its longest winning streak in 15 months). Finally, the drought in Panama is causing more supply chain problems. Previously, the draft depths of ships had been reduced. Now, the number of ships allowed to transit the Panama Canal has been reduced from 36 to 32 per day. The wait time, prior to transit, for the largest ships has risen to 17 days as ships stack up (and partially unload to reduce their draft).
In late-breaking news, Bloomberg released investor survey data (from 602 professional and retail traders they surveyed). The data shows that two-thirds believe it is still unclear that the Fed has done enough to fight inflation. However, more than half also say traditional Fed indicators (like the job market and price index data) will not be the driver when the Fed moves to cut. Instead, they feel the driver will be financial market turmoil that will prompt a Fed rate cut. At the same time, about 80% of respondents say they expect a recession in the EU within the next 12 months. I am not sure how this survey squares with the current Fedwatch Futures data that shows 89% of traders see no rate hike in September and only about a third even expect another hike at all in 2023.
With that background, it looks like the Bulls are in control so far in the premarket. All three major index ETFs show a premarket gap up and then are giving us white-bodied candles so far in the early session. However, none of them are close to retesting their T-line (8ema) yet. The short-term trend remains bearish with all three well below their T-line. Of course, the long-term trend is still hanging on to a bullish course but it has been pushed by the Bears over the last three weeks. As far as extension goes, the premarket move gets rid of any concern about overextension below the T-line (8ema). Meanwhile, the T2122 indicator remains quite oversold, but it is not pegged to the bottom of its range. So, we have room to move either direction, but are still due for a pause or bounce soon. Just remember the market can remain too extended a lot longer than we can remain solvent betting on a reversal that has not happened yet.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
Worries about the Chinese economic decline and higher rates and pressure it creates in the financial sector left markets little changed on Friday in a very choppy session. However, the short-term oversold condition suggests a relief rally to challenge overhead resistance could begin at any time. Uncertainty and price volatility are likely as we wait on the Fed speakers and talking head marketeering coming our way later this week from Jackson Hole.
Asian markets finished the day mixed after China cut their 1-year prime rate but surprisingly left the 5-year rate unchanged as their real estate crisis continues to expand. European markets trade higher across the board this morning as investors look to relieve some of last week’s selloff. U.S. market ahead of a light day of earnings and economic reports also point to some bullish relief with futures suggesting a gap up open though substantial overhead resistance awaits the challenge.
Economic Calendar
Earnings Calendar
Notable reports for Monday include FN, NDSN & ZM.
News & Technicals’
China has lowered its one-year loan prime rate (LPR) by 10 basis points to ease the financing costs for businesses and households amid the economic slowdown caused by the coronavirus pandemic. The one-year LPR, which is the benchmark for most consumer and corporate loans in China, was reduced from 3.55% to 3.45%, according to the announcement by the People’s Bank of China on Monday. However, this cut was smaller than the 15 basis points that most economists had expected, according to a Reuters poll. On the other hand, China kept its five-year LPR, which is the reference for most mortgages, unchanged at 4.2%, despite the market anticipation of a 15-basis point reduction. This suggests that China is still cautious about stimulating the housing market, which has shown signs of recovery in recent months.
A former regional manager of Starbucks has won a legal victory against the coffee giant, after claiming that she was discriminated against because of her race. Shannon Phillips, who is white, sued Starbucks for wrongful termination, alleging that she was fired in 2018 for opposing the company’s policy of punishing white employees more harshly than Black employees following the controversial arrests of two Black men at a Philadelphia store. Phillips said that she was singled out and treated differently from other managers who were not white. In April, a jury awarded Phillips more than $25 million in damages for lost earnings and emotional distress. On Friday, a judge ordered Starbucks to pay an additional $2.7 million in lost wages and tax damages to Phillips, bringing the total amount to nearly $28 million. Starbucks said that it was disappointed with the verdict and planned to appeal.
The U.S. Treasury market saw a rise in yields on Monday, as investors prepared for a busy week of economic data and speeches from Federal Reserve officials. The yield on the 10-year Treasury note, which moves inversely to its price, climbed 4 basis points to 1.62%, while the yield on the 30-year Treasury bond rose 3 basis points to 2.32%. The higher yields reflected the expectations of stronger economic growth and inflation in the U.S., as well as the uncertainty about the Fed’s monetary policy stance. Investors were looking forward to hearing from Fed Chair Jerome Powell and other Fed policymakers, who were scheduled to speak at various events throughout the week. They were also awaiting the release of key economic reports, such as the consumer price index, retail sales, and industrial production, which could provide more clues about the state of the U.S. economy and the outlook for interest rates.
The S&P 500 ended the week with little change on Friday, but it was still down for the third week in a row due to worries about China and rising interest rates. The Nasdaq, which is more sensitive to interest rates, also suffered from the high level of the 10-year Treasury yield, which dropped slightly Friday but stayed close to its highest point in 11 years. Global markets also fell, as investors were concerned about the troubles in China’s property sector. The months of August and September tend to be more challenging for stocks, with bigger swings and deeper corrections but the short-term oversold condition now suggests a relief rally could begin at any anytime. With very little on earnings and an economic calendar expect volatility as we wait for all the talking head speeches from Jackson Hole later in the week.
On Thursday, markets started the day a bit higher (gapping up 0.24% on the SPY, up 0.33% in the DIA, and up 0.39% in the QQQ). However, that was essentially the last we saw of the Bulls for the day. After that open, the DIA managed to grind sideways in a very tight range until 11 am. Then it sold off in waves, closing on the lows. After its gap, the SPY sold off slowly until noon, had a very weak one-hour bounce, and then also sold off all the way into the close. QQQ immediately sold off harder than the other two major index ETFs for the first hour. At that point, it modestly bounced until 1 pm before it also sold off hard the rest of the day. This action gave us large black-bodied candles with tiny wicks in the SPY, DIA, and QQQ.
On the day, nine of the 10 sectors were in the red again with Consumer Cyclical (-1.40%) once more leading the way lower and Energy (+0.83%) holding up much better than any other sector. At the same time, the SPY lost 0.76%, DIA lost 0.78%, and QQQ lost 1.09%. VXX gained another 4.81% to close at 26.38 and T2122 dropped even further into the oversold area at 2.86. 10-year bond yields continued to climb to 4.284% while Oil (WTI) climbed to close at $80.39 per barrel. This all took place on slightly less-than-average volume again across all three major index ETFs. So, the Bulls opened us higher. However, after that, it was all Bears all the time the rest of the day, even picking up speed in the afternoon.
The major economic news reported Thursday included Weekly Initial Jobless Claims that came in just a bit below expectation at 239k (compared to a forecast of 240k and the prior week’s 250k reading). At the same time, the Philly Fed Manufacturing Index was reported dramatically higher than predicted at +12.0 (versus the -10.0 forecast and even further above the July value of -13.5). However, the Philly Fed Employment Index came in well below anticipated at -6.0 (compared to a forecast of -0.7 and even the July reading of -1.0). Then, after the close, the Fed’s Balance Sheet showed another reduction of $62 billion, down to $8.146 trillion from $8.208 trillion.
The NY Fed released survey results Thursday afternoon. The survey found that, at least as of just before the late-July Fed meeting, big banks and money managers believed the July rate hike would be the last one for this tightening cycle. The survey also showed that most “Primary Dealers” believe we will see Fed rate cuts starting in April, while money managers think the cuts will begin in March of 2024. Furthermore, the big banks expect the Fed to stop reducing its Balance Sheet when it reaches $6.75 trillion (now at $8.146 trillion as reported above and falling at a rate of about $50-$75 billion per week).
In stock news, Blue Shield of CA made major waves by announcing it will stop using CVS to manage its pharmacy benefits program and will instead work with AMZN and other firms. (CVS lost 8.14% on the day on this news.) Elsewhere, PFE announced that its updated COVID-19 vaccine does show “neutralizing activity” against the Eris subvariant in addition to the (still dominant) Omicron variant. Not to be outdone, MRNA announced the results of an initial study which showed their updated COVID-19 vaccine is “effective” against Omicron, Eris, and Fornax variants. In the afternoon, troubled electric carmaker MULN launched a $25 million stock buyback program in an effort to boost the stock price and avoid being delisted. At the same time, private trucking company Estes Express submitted a $1.3 billion bid to purchase the freight terminals of bankrupt YELL. Meanwhile, F and its partners (a consortium of South Korean firms) announced they will build a $900 million battery factory in Quebec. In the late afternoon, Bloomberg reported that GS is on a hiring spree, having hired several hundred new staff to address concerns identified by the Fed. Twitter (“X”) was in trouble yet again Thursday after ads from ADBE, GILD, and several other brands were run beside “pro-Nazi” content. ADBE and GILD have suspended advertising on X after the latest in the social media platforms series of blunders.
In stock legal and regulatory news, the union for striking Hollywood Writers sent a letter urging the FTC to investigate DIS, AMZN, and NFLX on antitrust grounds. The Writers Guild of America told FTC Chair Khan that those three companies have amassed too much power in the streaming media industry and are now effectively an oligopoly. At the same time, GOOGL’s YouTube unit defeated a racial bias lawsuit that had been filed by black and Hispanic content creators. A US District Judge in San Francisco threw out the case, saying the claims did not come close to suggesting discrimination. Elsewhere, Reuters reported that US Customs has begun increased inspections of car parts being imported from China in an effort to identify and stop the import of any products produced by supply chains involving forced (Uyghur) labor. At midday, TSLA notified Core Lithium it will sue the Australian miner in seven days unless the two sides reach a mutual agreement. This comes after the two companies failed to reach an agreement on supply quantities and prices prior to a mutually agreed prior date. Late in the day, C was subpoenaed by the US House Judiciary Committee (GOP) over alleged data sharing with the FBI without the appropriate legal process prior to that disclosure. This is part of the effort by the GOP members of the committee to help the January 6 defendants by using subpoena power to provide extra discovery for their defenses.
After the close, AMAT, GLOB, KEYS, and ROST reported beats on both the revenue and earnings lines. However, FTCH missed on both the top and bottom lines. It is worth noting that AMAT and ROST raised forward guidance. On the other side, KEYS and FTCH lowered their guidance.
Overnight, Asian markets were nearly red across the board with only Australia (+0.03%) barely hanging on to green. Hong Kong (-2.05%), Shenzhen (-1.75%), and Shanghai (-1.00%) led the region lower. In Europe, we see a similar picture taking shape at midday with only Russia (+0.64%) appreciably in the green. Meanwhile, The CAC (-0.81%), DAX (-0.77%), and FTSE (-0.80%) are leading the region lower in early afternoon trade. In the US, as of 7:30 am, Futures are also pointing to a red start to the day. The DIA implies a -0.18% open, the SPY is implying a -0.33% open, and the QQQ implies a -0.61% open at this hour. At the same time, 10-year bond yields are down sharply to 4.223% and Oil (WTI) is off a quarter of a percent to $80.19 per barrel in early trading.
There is no major economics news scheduled for Friday. The major earnings reports scheduled for before the opening bell include DE, EL, VIPS, XPEV, and PANW. Then, after the close, there are no major reports scheduled.
So far this morning, DE and EL reported beats on both the revenue and earnings lines. Meanwhile, VIPS missed on revenue while beating on earnings. However, XPEV missed on both the top and bottom lines. It is worth noting that DE raised its forward guidance while EL, VIPS, and XPEV all lowered their guidance.
In miscellaneous news, JPM reported Thursday that hedge funds have slowed down their exit from value and small-cap stocks in the last month. The study said the flow of funds moving from value to growth stocks in the last month (as “AI fever” hit) has now drawn mostly ended. This report seems reasonable as the “high growth” QQQ names are down 6.54% since the first of the month. Elsewhere, China’s largest developer and the world’s most heavily indebted real estate company, China Evergrande, filed for Chapter 15 bankruptcy protection in NY on Thursday. (Chapter 15 is the foreign entity equivalent to Chapter 11.) Finally, the Texas electric grid operator (ERCOT) issued a voluntary power conservation request for Thursday, saying it expected to hit its tenth record high demand of the summer in the late afternoon and evening. NRG (which also serves parts of TX) also requested customer electric conservation for the same reason.
In late-breaking news, Bitcoin plummeted 9% between 5:30 pm and 5:35 pm Thursday night. The news came a few hours after SpaceX disclosed it had written down its Bitcoin holdings by $373 million. The main cryptocurrency recovered about half of the losses by 9:30 pm. Elsewhere, Reuters reported that last night President Biden approved the sending of F-16 fighters from Denmark and the Netherlands to Ukraine. These planes will eventually be replaced by F-35 jets from LMT.
With that background, it looks like the Bears are still in control so far in premarket. We see black-body candles trading near the lows of the early session in all three major index ETFs at this point. The trend remains bearish with all three below their T-line (8ema). QQQ and DIA are getting close to their next potential support level this morning. However, SPY still has air below it until it reaches potential support. Of course, the long-term trend is still hanging on to a bullish course but it is being pushed hard by the Bears over the last three weeks. As far as extension goes, we are getting extended below the T-line (8ema) in al three with the SPY and QQQ being especially stretched. The T2122 indicator also remains very oversold, but not yet quite pegged to the bottom of its range. So, we are do for a pause or bounce soon. However, remember the market can remain too extended a lot longer than we can remain solvent betting on a reversal that has not happened yet. Also keep in mind that this is Friday, payday. So, take some profits off the table and prepare your account for the weekend news cycle by lightening up, hedging, or buying some insurance for your positions.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
Indexes continued to slide on Wednesday after a miss from Target and Fed minutes revealed that policymakers were concerned about higher inflation. Technical damage grew with the SPY, QQQ, and IWM failing below their 50-day averages and the VIX-X confirmed its lower high following though. However, the T2122 is signaling a short-term oversold condition suggesting a relief rally could occur at any time if the pending data can give the bulls some encouragement. Today we have several notable earnings reports with Wal-Mart leading the way this morning fullered shortly after with numbers on Jobless Claims and the Philly Fed MFG.
Asian markets closed mostly lower overnight as Fed minutes add investor worry about further rate increases. European markets trade mixed and relatively flat in a cautious morning session. With earnings and economic numbers pending the U.S. futures are trying to show confidence in a relief rally beginning but that could fade quickly if the data doesn’t support the hope. Plan for more volatility as uncertainty grows.
Economic Calendar
Earnings Calendar
Notable reports for Thursday include AMAT, BILI, DOLE, FTCH, KEYS, LITE, ROST, TPR, & WMT.
News & Technicals’
The U.S.-China trade tensions escalated on Wednesday when President Biden signed an executive order to ban American investments in 59 Chinese companies that are allegedly involved in developing advanced technologies for military purposes. The order, which will take effect on August 2, aims to protect the national security and interests of the U.S. and its allies from the threats posed by China’s military-industrial complex. However, China’s Ministry of Commerce expressed its strong opposition to the move and warned that it would take necessary countermeasures to safeguard its legitimate rights and interests. The ministry’s spokesperson also said that China and the U.S. were in close contact on trade issues, but did not confirm the date of a possible visit by U.S. Commerce Secretary Gina Raimondo to Beijing. The spokesperson urged the U.S. to respect the market principles and the rule of law and to stop interfering in China’s internal affairs.
Russia’s central bank surprised the markets on Tuesday by raising its key interest rate to 12% from 8.5%, in an attempt to stop the free fall of the ruble, which has lost more than 40% of its value against the dollar this year. The decision came after sharp criticism from President Putin’s economic advisor, who blamed the bank’s “loose monetary policy” for fueling inflation and weakening the currency. The advisor argued that the bank should focus on stabilizing the exchange rate rather than supporting economic growth, which has been hit hard by Western sanctions and falling oil prices. However, the bank’s governor had previously defended her policy, saying that the main causes of the ruble’s decline were external factors, such as the shrinking trade surplus and the increased demand for foreign currency by Russian companies. She also warned that a higher interest rate could further damage the already fragile economy, which is expected to contract by 4.5% next year.
The stock market continued to slide in August, as the Fed’s minutes from its last meeting revealed that policymakers were concerned about higher inflation. Some investors took this as a sign that the Fed might tighten its monetary policy sooner than expected, but we note that inflation and wage growth have slowed down since the meeting. Global stocks also suffered from fears about China’s slowing economy. On a positive note, U.S. industrial production increased in July for the first time in three months, thanks to a boost in auto production. This suggests that the economy is starting the third quarter on a strong footing. The 10-year Treasury yield climbed to 4.27%, matching its highest level since last October*.
Markets started the day just on the Bearish side of flat (gapping down 0.10% in the SPY, down 0.13% in the DIA, and down 0.13% in the QQQ). At that point, we saw a modest divergence with DIA rallying sharply for 20 minutes to reach the highs of the day before slowly meandering back down the rest of the day. Meanwhile, the SPY and QQQ meandered sideways with a very modest Bullish trend until shortly after 11 am. Then the SPY and QQQ sold off briskly until 1 pm and ground sideways until 3 pm before resuming their move lower. All three of those major index ETFs went out very near their lows of the day. This action gave us black-bodied candles with upper wicks in all three.
On the day, nine of the 10 sectors were in the red with Consumer Cyclical (-1.25%) leading the way lower and Utilities (+0.26%) being the only sector to hang on to the green territory. At the same time, the SPY lost 0.73%, DIA lost 0.53%, and QQQ lost 1.06%. VXX gained 1.61% to close at 25.17 and T2122 dropped slightly, further into the oversold area at 5.54. 10-year bond yields continued to climb to 4.27% while Oil (WTI) was down 2.22% to close at $79.19 per barrel. This all took place on less-than-average volume again across all three major index ETFs. So, the Bears put in some work, following through to the downside after a tepid early attempt to reverse the downtrend by the Bulls.
The major economic news reported Wednesday included Preliminary July Building Permits, which came in slightly below expectations at 1.442 million (compared to a forecast of 1.463 million and a June reading of 1.441 million). On a month-on-month basis, this was actually a +0.1% move (versus a forecast of -1.7% and June’s 3.7% fall). At the same time, July Housing Starts were reported above the predicted amount at 1.452 million (compared to the 1.448 million forecast and the June value of 1.398 million). On a month-on-month basis, that was a strong +3.9% (versus a forecast of +2.7% and vastly better than June’s -11.7%). Later, July Industrial Production was a matter of what timeframe you are considering. On a month-on-month basis, Industrial Production rose more than anticipated at +1.0% (compared to a forecast of +0.3% and June’s 0.80% decline). However, on a year-on-year basis, July Industrial Production was a bit worse than expected at -0.23% (versus a -0.10% forecast but still significantly better than June’s 0.78% decline). At midmorning, the EIA Weekly Crude Oil Inventory saw a much bigger drawdown than predicted at -5.960 million barrels (compared to a forecast of -2.320 million barrels and far worse than the prior week’s inventory build of 5.851 million barrels). The EIA also said that US Oil Production reached a new three-year high of 12.7 million barrels per day on average produced last week.
The July Fed Meeting Minutes came out Wednesday. They showed a divided FOMC, with “some” members citing the risks of pushing rates too far even as “most” members still prioritizing the fight against inflation over the potential for economic harm. For example, “a couple” participants called for leaving rates unchanged again in July. Still, the vote was unanimous to raise a quarter point. Later, the committee discussed risk management steps that might bear on future rate decisions. In summary, the minutes showed the group was committed to following the course they had been indicating to markets for some time. However, at least the written verbiage they want to put out will continue to say everything is “data dependent.” With that said, they may have tipped their hand as to how the group is leaning when it was agreed that future moves will be dictated by the data which will “help clarify the extent to which the disinflation process was continuing.” In addition, both staff economists and the committee members now seem to see a potential “soft landing” taking shape.
In stock news, GM invested $60 million in another battery startup (Mitra Chem), which specialized in using AI to optimize the design and creation of lithium-ion battery parts. Elsewhere, Bloomberg reported that BAESY is in talks to acquire BALL’s aerospace division for more than $4 billion. At the same time, MULN announced that it will debut its ultra-high-performance FIVE RS crossover vehicle on August 20. (The FIVE RS will reportedly do 0-60mph in less than 2 seconds and will have a top speed over 200mph.) Later, Reuters reported that MT is now considering entering the bidding for X and has brought in investment bankers to help prepare an offer. After the close, BX (along with a private company and Canada’s second-largest pension fund) struck a deal with BAC. The deal will allow them to buy $1.5 billion worth of solar and wind plants to capitalize on the 2022 Biden green energy funding in the Inflation Reduction Act. As part of the deal, a private company (Invenergy Renewables) will sell BAC $580 million of tax credits and put the money toward 14 projects being led by AEP. Overnight, the Wall Street Journal reported that GOOGL’s Health Science unit (Verily) is planning more cost-cutting after losing more money than expected in the last year. The details are unknown but Verily laid off 200 workers and discontinued some products earlier this year. At the same time, Reuters reports that TSN is now planning to sell its Chinese poultry business according to three sources. That unit has $1.1 billion in annual sales revenue. Also overnight, BAESY did agree to buy BALL’s aerospace unit but for a higher-than-expected $5.55 billion in cash. Finally, early today Reuters reported that STLA is investing more than $100 million in CA lithium extraction company Controlled Thermal Resources. (BRKB has struggled to extract lithium in the same area due to large concentrations of silica in the brine from which lithium is extracted. Controlled Thermal has the technology to remove the silica and other undesirable elements prior to the extraction process.)
In stock legal and regulatory news, Bloomberg reported that V is facing an investigation by the Dept. of Justice over how much it charges merchants for the technology used to safeguard cardholder data. (That service is called “tokenization” and it replaces the card number used with a computer-generated token.) The DOJ is investigating the validity of charging merchants more for not using the new tokenization service it offers. (MA reached a settlement in December with the FTC over the same practice the DOJ investigating V over.) At the same time, a lawsuit was filed against SBGI, by its bankrupt subsidiary, accusing SBGI of siphoning off $1.5 billion from the bought-out firm, causing the bankruptcy. Elsewhere, INTC announced it has abandoned the proposed purchase of TSEM after being unsuccessful in getting Chinese authorities to approve the deal. As a result of killing the deal, INTC owes TSEM $353 million. At the same time, the NHTSA announced that TM is issuing a recall for 168k 2022-2023 hybrid pickup trucks over a potential fuel leak fire hazard. In Europe, the Czech government passed a law that will charge multinationals a 15% minimum profit tax for companies with greater than $817.50 million in sales in two of the last four years. (This is aimed at preventing multinationals from moving profits to a country of the least taxes.) Back in the US, the state of TX approved the TSLA standard for charging networks in that state to qualify for federal funds. Meanwhile, officials from seven states wrote to FTC Chair Khan opposing KR’s proposed $24.6 billion acquisition of ACI. At the same time, Reuters reported that ALL has agreed to pay $90 million to settle a class action suit brought by shareholders who had accused the insurer of lowering underwriting standards (poor risk management) to boost sales growth. At the close, the FDA announced it has approved a bone disorder treatment from IPSEY. The drug will have an estimated cost of $400,000 per year and this gives the company a lead over REGN which has a treatment for the same disease still listed as experimental. After the close, 16 people who witnessed the 2022 Buffalo NY grocery store mass shooting filed suit against three firearms retailers and GOOGL (where the defendant live-streamed the shooting on YouTube). Also after the close, the FTC approved the EQT acquisition of QMCO for $5.2 billion (announced in September 2022).
After the close, A, HRB, JKHY, NU, and LRN all reported beats on both the revenue and earnings lines. However, SQM missed on both the top and bottom lines. It is worth noting that A also lowered its forward guidance. So far this morning, JD, TCEHY, and TJX reported beats on both the revenue and earnings lines. Meanwhile, EAT, PFGC, and TGT missed on revenue while beating on the earnings line. It is worth noting that TGT cut its full-year guidance.
Overnight, Asian markets were mixed but leaned toward the red side. Shenzhen (+0.61%), Thailand (+0.61%), and Taiwan (+0.42%) led the gainers. Meanwhile, Malaysia (-1.06%), New Zealand (-0.95%), and Australia (-0.68%) paced the losses. However, in Europe, the bourses are leaning strongly to the downside at midday. The breadth of losses is wide with Finland (+0.31%) being the only appreciable green while the CAC (-0.05%), DAX (-0.07%), and FTSE (-0.13%) are typical of modest losses and lead the region lower in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward a modestly green start to the day. The DIA implies a +0.27% open, the SPY is implying a +0.21% open, and the QQQ implies a +0.18% open at this point. At the same time, 10-year bond yields are climbing again at 4.302% and Oil (WTI) is 1.12% to $80.25 per barrel in early trading.
The major economics news scheduled for Thursday includes Weekly Initial Jobless Claims, Philly Fed Mfg. Index, and Philly Fed Mfg. Employment (all at 8:30 am), and the Fed Balance Sheet (4:30 pm). The major earnings reports scheduled for before the opening bell include ARCO, BILI, DOLE, NICE, TPR, and WMT. Then, after the close, AMAT, FTCH, GLOB, KEYS, and ROST report.
In economic news later this week, on Friday, there is no significant economic news scheduled.
In terms of earnings reports, on Friday, DE, EL, VIPS, XPEV, and PANW report.
In miscellaneous news, the National Futures Assn. approved COIN to sell crypto futures to us investors on Wednesday. (75% of all global cryptocurrency transactions are done using futures. However, US investors have not been able to participate in that market until this approval.) Meanwhile in Washington, as Congress headed home for summer recess there was no movement on the Appropriations bills, which could lead to a government shutdown. However, an interesting development was hinted at. House Speaker McCarthy floated the idea of a continuing resolution, kicking the can down the road until December or January. Democrats, especially in the Senate, were very supportive of the idea. The “why?” is the interesting part. Speculation is that some people believe pushing off the decisions until later may see legal developments having weakened one faction’s support from the base and made them more amenable to compromises. It’s pure speculation, but it might make sense since nothing else is likely to change between the two sides whether the deadline is in 30 days or five months.
So far this morning, BILI, NICE, and WMT all reported beats on both revenue and earnings. Meanwhile, DOLE missed on revenue while beating on earnings. However, TPR and ARCO missed on both the top and bottom lines. It is worth noting, the BILI and TPR have lowered their forward guidance. At the same time, WMT raised its forward guidance.
With that background, it looks like markets are looking to give us a modest gap-up, but indecisive start to the morning. The SPY and QQQ are giving us the strongest (white-bodied) premarket candles but that is not saying much. The trend remains bearish with all three major index ETFs below their T-line (8ema). None of the three major index ETFs have a potential support level immediately below at this moment. Of course, the long-term trend is still hanging on to a bullish course but it is being pushed by the Bears over the last three weeks. As far as extension goes, we are starting to get a little bit extended below their T-line (8ema) and the T2122 indicator remains very oversold, but not yet quite pegged to the bottom of its range. So, both sides have some slack to work with. However, the Bulls have much more room to run and we may be in need of a pause or pullup.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
